Attorney Terrell Monks practices law in Midwest City, Oklahoma, where he focuses his profession on probate, estate planning, guardianships and municipal law. He has been assisting clients in the area of probate and estate planning for more than 18 years.

Terrell Monks is also active in public service. He has served as Mayor and City Councilman of the City of Nicoma Park, served as the President of his Kiwanis club, first as a member, and now as the Chairman of the Oklahoma Bar Association’s Legal Intern Committee, and as the Treasurer of the Estate Planning, Probate, and Trust Section of the Oklahoma Bar Association.

Attorney Terrell Monks offers clients highly competent legal advice and produces excellent work. He is attentive to his clients’ needs and works with his clients as they go through the probate process rather than leaving them confused as to what is happening on their cases. He is readily available to answer clients’ questions and wants to make their experiences as smooth and educational as possible.

Introduction to this Book

The goal of this book is to make your probate experience smooth and efficient. You may see the probate process as a complicated maze of decisions, court documents, hearings and fees. You are not alone; many attorneys do not fully understand probate. However, with the assistance of a competent probate attorney and some general knowledge of probate procedures, your experience can be more like walking on a well-marked trail than through a maze.

This book is designed to give you a general knowledge of probate and describe the part you can play in assisting your attorney. The book walks you through each step of the probate process. It starts by preparing you for your initial meeting with your attorney and ends with an explanation of how the probate estate will be distributed.

It is my hope that as you use this book to guide you through the probate process you will more fully understand each stage of the procedure, be able to effectively assist your attorney, and save money on overall costs and fees.

Chapter 1

What is Probate?

Perhaps the most important chapter of this book is the first one. You have probably heard about probate many times during your life, and you likely have at least a vague understanding of what it is, but you may not know why it exists or why it is necessary. The answer to these questions is probably important to you, or you would not be reading this book today. So, let’s talk about it.

At the most basic level, probate is the judicial process whereby the final affairs of the deceased person are wrapped up and his or her remaining assets distributed to either the persons he named in his will or, if there is not a will, the persons stated in the law.

You might wonder why it is even necessary that the probate process exist when we have Grandpa’s last will and testament, and it clearly states who receives what items. At least part of the answer to this question is that there are often disputes as to which last will and testament is the most recent will and the one that Grandpa signed while he was mentally competent. Sometimes when Grandpa becomes feebler he becomes more subject to pressure from family and friends who have their own interests in mind. In some families there are members who are not only willing, but also able, to convince Grandpa to change his will in their favor. Probate is the judicial process whereby everyone affected by Grandpa’s will has the opportunity to be heard concerning the validity of the will that has been submitted and whether it was signed when Grandpa had mental capacity and accurately reflected grandpa’s true desires. This opportunity is an important part of the probate process. All sides should receive notice that the probate is being opened and should receive the opportunity to file any objection or bring to court any document that they believe helps the court know what grandpa wanted and when he wanted it.

Next, it is important to almost all of the heirs that their inheritance be free from later claims from Grandpa’s creditors. Oklahoma probate contains some very important protections for both the heirs and the creditors. First the creditors must be given notice of the opportunity to file a claim, if those creditors are known or could be found upon a reasonable search. Second, the time that the creditors have to file their claims during probate is a much shorter time than they might have under the law outside of the probate process. This is an extraordinarily valuable benefit to the heirs. In a matter of several weeks, the court procedure can reduce the opportunity for creditors to make claims from two to five years down to a couple months.

In summary, probate is the court process by which everyone who has an interest or stake in the estate of a deceased person may put forth all of their claims, arguments, and documents. They will have the court consider all of the law and facts and then make an orderly distribution to the heirs after all of the creditors have been satisfied, or their time to make a claim has expired.

You may still question why there should be a probate and why you may not just take the will to the court and transfer grandmother’s property into your name. I sometimes liken a will to the set of assembly instructions that came with my daughter’s first bicycle. We had in the box everything necessary to create a bicycle and we had a set of written instructions as to how the bicycle should be assembled. But you know, from painful experience perhaps, that there is substantial time and effort to be applied to those instructions and bicycle parts, before you actually have a bicycle. Similarly, the will should be a good set of instructions, but someone, probably you and your attorney, will have to invest some time and energy to complete the tasks described in the will. That process is the probate process.

Chapter 2

What is not Subject to Probate

THE HOMESTEAD

There are some assets that are not subject to probate. The most common one is probably the homestead, which is held in joint tenancy with the spouse of the deceased person.
Where grandfather has passed and held title to his home, with his wife, as a joint tenant with the right of survivorship, the house will not be subject to probate as long as grandmother survives. The surviving spouse will need to file an affidavit of surviving joint tenant with the local county clerk. Attached to that affidavit must be a certified copy of the deceased joint tenant’s death certificate. As you might expect, your attorney will be happy to help you with the preparation and filing of this affidavit during the probate process.

BANK ACCOUNTS IN JOINT TENANCY

Similar to the homestead, many bank accounts can be held as joint tenants with the right of survivorship. Such an account is not subject to probate, as the deceased person will have signed a contract with the bank or financial company wherein the decedent has specified who receives this account when the decedent passes away.

Occasionally, but not often, such an account will become part of the probate estate. If someone proves that the deceased person made this beneficiary designation only as a convenience and did not intend to hold the property jointly or for the named joint tenant to inherit the account, the money in the bank account may pass through probate.

CARS HELD IN JOINT TENANCY

Cars may also be titled in two names. If the names in the title are separated by “and/or,” there arises a presumption that the car is held in joint tenancy and that either of the named owners may exercise ownership rights, including the right to sell the car. A car held in such a manner is generally not subject to probate proceedings.

LIFE INSURANCE

Generally, life insurance contracts will specify the beneficiary who will receive the life insurance proceeds after the purchaser of the life insurance has passed. That contract is called a beneficiary designation, and when properly completed the life insurance funds do not pass subject to probate. If, however, the named beneficiaries pass before the purchaser, the life insurance is likely to pay into the probate estate. This is not common, but it does happen occasionally.

TRUSTS

Assets that are owned by a trust are not usually subject to probate proceedings, so long as the trust is properly prepared and managed. This is because the trust is a separate legal entity from the deceased person. It is a little bit like the decedent created a personal corporation. Usually the trust includes provisions that describe and control what happens to the decedent’s property after the decedent has passed away. So long as the assets were properly funded into the trust, the probate process should not control those assets. However, the decedent cannot avoid providing for a surviving spouse through the use of a trust.

Trusts offer some important advantages over outright gifts passing through probate. For example, there are situations when it is not in the best interest of your beneficiary that she receives money outright. First, if she (your beneficiary) has been sued, or is in a career that makes it likely that she will be sued, a gift that is held in trust can protect her from predatory lawsuits and creditors. Second, if your beneficiary may be involved in a divorce, it may be important to shield your gift from a vindictive ex-spouse. Third, and possibly the most important, if your beneficiary becomes incapacitated and is receiving full time nursing care, your gift may disqualify her from receiving Medicaid benefits, unless that gift is shielded by a trust.

Chapter 3

Preparing for Your First Meeting With Your Probate Attorney

Your time will be better spent, and you may reduce expenses, if you arrive at your attorney’s office prepared to provide the information needed for your case. This chapter is designed to inform you what information is needed early in the probate proceedings, and where you should begin to look for that information.

IS THERE A WILL?

First, it is important for you to research whether the decedent had a last will and testament. If there is a will, the decedent will be deemed to have died “testate,” and the estate should pass to the named beneficiaries. If there is not a will, the decedent is deemed to have died “intestate,” and the estate will pass according to the state statutes of intestacy. Intestacy statutes direct that the decedent’s estate pass to the decedent’s heirs-at-law. Generally, under the statutes of intestacy, these will be the decedent’s nearest relatives. If some of the decedent’s nearest relatives have passed away, their children may receive their shares.

In some cases, the family does not know whether the decedent had a will. If that occurs, it may be necessary to go to the banks where the decedent conducted his or her business and ask if the decedent kept a safety deposit box. If there is a safety deposit box, and if you provide proof of death to the bank, the bank will generally open the safety deposit box in your presence and will make an inventory of the contents of the safety deposit box. If a will is found in the safety deposit box, and if you are named in the will, the bank will generally provide you with a photocopy of the will. You should provide this photocopy along with the location of the original will to your attorney. Once your attorney has this information, the probate case may be opened and the court advised of the location of the original will. The court may then order the bank to provide the original will to you, directly to the court, or to your attorney.

It is important to note that only an original will may be admitted to probate. The Oklahoma Supreme Court has ruled that in the absence of an original will, the court must presume that the testator intended to destroy her will because she no longer liked the way it distributed her property. If you are only able to locate a photocopy of a will, it will become important for you to investigate when the original will was last seen. In Oklahoma, if you cannot locate an original will and no one has seen it since the decedent’s passing, it is quite likely that the court will be unable to honor and therefore unable to probate a photocopy of a will.

There are a few occasions when a court may admit a photocopy of a will to probate. The court can admit a photocopy of the will when the evidence proves that the original will has been seen after the passing of the testator, and there is an explanation as to what happened to the original will. This may occur where some event such as a fire destroyed the original will after the death of the testator.

Determining the Heirs-At-law and Beneficiaries

Whether or not there is a will, it is important that you locate the “heirs-at-law.” The precise definition of who the decedent’s heirs-at-law are is defined in Oklahoma statutes. As mentioned above, these definitions are used to determine who receives the decedent’s property in the absence of a will.

The “heirs-at-law” are generally the decedent’s nearest relatives, spouse, children, parents, and it could even be brothers and sisters, nieces and nephews and more. You should generally start by locating the decedent’s spouse and descendants. If there are descendants, they will be the heirs-at-law. If the decedent has no descendants, then you will need to start locating the decedent’s siblings and possibly nieces and nephews. One important thing to note is that heirs-at-law generally only constitute the oldest living member of each familial line. For example, if the decedent had no descendants but three surviving siblings and one deceased sibling, the children of the surviving siblings are not considered decedent’s heirs-at-law; locating the decedent’s siblings would be enough. However, the children of the deceased sibling will be considered as the decedent’s heirs-at-law, and should therefore be located. Your attorney will be able to assist you in determining which family members will be considered heirs-at-law under the Oklahoma statutes. So, be prepared to advise your attorney of all of the decedent’s relatives.

When there is a will, the beneficiaries will be named. This includes beneficiaries who will receive and contingent beneficiaries, beneficiaries who may receive in certain situations. You will need to determine each type of beneficiary. Often the beneficiaries under the will are also the heirs-at-law, but sometimes they are different people altogether.

Locating the Heirs-At-law and the Beneficiaries

In any event, both the beneficiaries under the will and the heirs-at-law must all be given notice of the probate hearings and other important actions taken during the probate. Which means that you must be able to locate them!

Some people find it counterintuitive that heirs-at-law who do not inherit under the will, still receive notice. However, these heirs-at-law have a right under Oklahoma law to come to court and contest the will and in order to exercise this right, they must receive notices in the probate case.

You and your attorney will need to identify the heirs-at-law and their mailing addresses to the greatest extent reasonably possible. If some of them cannot be located, your attorney may be able to assist by publishing notice.

It is very important that you make a good faith effort to accurately locate all the beneficiaries and heirs-at-law. One of the most important parts of your job is in assuring that everyone is treated fairly. Therefore, you have a duty to locate all the heirs-at-law and beneficiaries to the best of your ability. If you are unable to locate them on your own, it is probably necessary that you seek professional assistance in locating these people.

Family TroubleMakers

Is there a troublemaker in the family? In almost every family there is someone who is not happy unless there is a fight. In many families there are members who will not be happy unless they get more than their fair share. Be sure that you advise your attorney if there is a troublemaker and who this person is. Consider carefully what they are likely to want, or what they have asked to receive. Share this info with your attorney. There may be times when giving in a little bit saves you a lot of money in legal fees and court costs. Your attorney will best be able to advise you on how to proceed in this situation only if she knows whom the troublemakers are and what they are demanding.

Estimating the Estate’s Assets

Early in the probate, it is likely that you will only be able to estimate the assets that belong to the estate. You may not yet have bank statements, investment account records, real estate values, and the like. Oklahoma statutes require, however, that a petition for probate contain an estimate of the value of the estate. You can be certain that the judge will not hold you to this estimate if you carefully identify it as only being an estimate, and if you have made an honest effort to provide the best information you have available.

There will come a time when you will need to file an accurate accounting of what the estate owns, so it never hurts to start gathering the information and keeping very good track of it from the start. (See Exhibit 1 for an example of such a record). Make good notes about every asset that belongs to the estate, and be certain that you add it to your inventory when that time comes. Start early and keep very good records.

WHO SHOULD SERVE AS THE Personal Representative

If there is a will, generally the person nominated by the decedent should serve as the personal representative, unless there is some good reason that they should not serve. If the nominee has criminal charges for crimes of dishonesty, this information should be provided to the Judge as early as is reasonably possible.

When there is not a will, a personal representative must be selected and appointed. The Oklahoma statutes and Oklahoma case law give a surviving spouse a very strong preference in serving as the personal representative of the estate. If the surviving spouse does not want to serve, he or she may nominate the person that they would like the court to appoint as personal representative. Generally, the courts in Oklahoma are compelled to appoint the nominee of the surviving spouse absent some serious cause that he or she should not serve.

In the absence of a surviving spouse, the heirs and beneficiaries should attempt to reach an agreement on a person that they all trust. This should be someone who does not have a criminal record, is believed by the heirs and beneficiaries to be reliable, and must not be someone who would like to purchase property from the estate. You should consider whether the prospective personal representative is infirm, has been convicted of a felony or crime involving untruthfulness, is currently bankrupt, or has recently filed bankruptcy. In most cases such facts should be shared with the Court, especially when there is an absence of agreement among the heirs and beneficiaries. Generally, the personal representative should not be a business partner of decedent

I recognize that this is a lot of information to gather before you even have your first appointment with you’re attorney. You may not even be able to find all of this information, but bring all the information that you can reasonably gather as this will minimize the amount of time that your attorney is working on matters that you could handle without her assistance.

Chapter 4

Initial Pleadings

Following your first meeting with your attorney, the attorney will prepare the initial court documents, generally called pleadings. The first pleading is called a petition. If there is a will, the first pleading is called a “Petition to Admit Will to Probate.” If there is not a will, the first pleading is called a “Petition to Administer Estate.”

You should read this petition very carefully to assure that your attorney understood your information correctly. The petition will identify the name of the deceased person, the date he or she passed away, his or her state and county of residence on date of death, the names and addresses of the beneficiaries under the will, names and addresses of the heirs-at-law, and a brief statement describing the value of the decedent’s estate.

You should not expect or believe that everything your attorney puts into a formal legal pleading is correct. If you do not understand the document or the language, feel free to ask questions. This is your case and you will probably be signing a statement or testifying in court concerning the truth of this document. So be certain you understand what it says, and that what it says is accurate to the best of your knowledge.

Chapter 5

The First Hearing

Once you have signed the “Petition for Administration of Estate” or “Petition to Admit Will to Probate,” that petition is filed in the court clerk’s office of the county where the decedent resided at the time of death and the court will set a date for the first hearing. Often your attorney has some influence over the date of the first hearing, but that will be subject to the court’s availability.

In some counties, and before some judges, you will be expected to attend the hearing and give testimony in support of your petition. In other counties, your verified petition, which you have signed before a notary, serves as your testimony and you will not need to come to the hearing and testify unless there is an objection to your being appointed as the personal representative. In either event, if there are no objections to your petition, you can expect that the Judge will sign the Letters that prove you have authority over the estate.

Objections

If there is an objection to your serving as the personal representative, the judge will generally set a different court date for you to appear and for the judge to receive testimony. The right to make such an objection belongs to all the heirs-at-law and beneficiaries under the will. As stated above, they should, therefore, receive notice of this hearing in order that they might have the opportunity to ask that they be appointed as the personal representative, or that you not be allowed to serve.

Where there is a known trouble-maker in the family, it might be tempting omit his or her mailing address in hopes that he or she does not have the opportunity to come to court and voice an objection. Do not make the mistake of giving into this temptation. It is practically certain to come to the attention of the judge that not everyone who was entitled to receive notice of the hearing received that notice. This may result in changes or reversal at a later date. It may also result in the judge becoming aware of your not providing all of the information that the law requires. Such an omission could result in your future claims not being believed by the court and generally make the probate process much more cumbersome.

As a practical matter almost no petitions for appointment of personal representative are contested. Generally speaking, the person who petitions to become the personal representative is the one with the nomination from the decedent, the one willing to do the work for a fairly nominal fee, or the only one willing to step forward and take the task.

length of Hearing

If there is no objection to your being appointed as the personal representative, the hearing will not last very long at all. In Oklahoma County such uncontested hearings may last only a minute or two, although you may sit in the courtroom for an hour or more before your case is called. Before the hearing, the judge will have read the petition and know what is being asked of him or her. Your attorney will have already prepared the proposed order and letters of administration for your case. The judge will call the case, and if no one objects the judge will sign the documents previously prepared by your attorney.

In other counties this hearing may take a little longer because the judge will want to hear your testimony verifying the accuracy of the petition and the judge will expect you to sign your oath of office in front of him or her. Those hearings still do not last very long, but do take a little longer than the hearings in Oklahoma County.

Chapter 6

Notice to Creditors

Immediately after the first hearing, your attorney is likely to file a “Notice to Creditors,” provided that you have been able to produce a list of the creditors. This notice gives the potential creditors about sixty days to file their claims. This is a great benefit to the beneficiaries of the estate as it assures that they will not later have their inheritances reclaimed by a creditor of the decedent. All creditor claims must be filed by the deadline, or those creditors of the estate lose all opportunity to file a lawsuit on their claims later.

This advantage, the short opportunity to file a creditor claim, is only available and effective so long as you have done reasonable research to locate possibly creditors of the decedent and to give that information to your attorney, so that your attorney can provide the notice required by state law. Therefore, watch the decedent’s mail, review his or her checkbook for payments to possible creditors, and consider where it is likely that he or she might have a charge account.

Be certain to give notice to the hospital and other medical professionals who you believe may have provided healthcare services to the decedent in the time shortly before his or her death. These medical providers are reasonably ascertainable and should be given notice and an opportunity to file their claims for payment.

Chapter 7

Tips for a Personal Representative

You have now been appointed as the personal representative of the estate. Here are some important notes:

First, keep track of everything. Make excellent notes of what you do and why you do it. Make careful notes of all of the income that belongs to the estate and all of the expenses that belong to the estate (See Exhibit 1 for an example). Keep a copy of every receipt for all funds that you spend from the estate’s money or anything you spend from your money that should be reimbursed to you by the estate.

Second, read the decedent’s will and understand it. If the will requests or directs that a particular person receive a particular item, it is likely inappropriate for you to sell that item and use the proceeds of the sale for the benefit of the estate. There are exceptions to this general rule, but those exceptions are very few and rarely invoked.

Third, contact your attorney and ask questions when you are not sure what to do. Be careful to recognize when you are handling a matter for which you have no knowledge or experience. Call and email your attorney your questions and either keep that email response or make careful notes of the attorney’s guidance and directions. It is important that you have a reasonable basis for your decisions and that you not expose yourself and your finances to liability for your mistakes, even mistakes made in good faith.

Fourth, forward the decedent’s mail to your own address and watch that mail carefully to identify bills, whereby you may identify creditors or statements whereby you may identify assets. You may forward mail at www.usps.com with valid credit card number.

Chapter 8

Fiduciary Duties of a Personal Representative

In legal terms, the personal representative of the estate owes a fiduciary duty to the estate and to the beneficiaries of the estate. This is a phrase that lawyers use quite often but one that is not common in everyday speech. I would explain it like this: the personal representative owes the highest duty of fidelity, loyalty, and accuracy to the estate, to the court, and to the beneficiaries of the estate. In the law, and in the minds of our judges, the fiduciary duty means that the personal representative must treat the estate assets and the estate business with the highest degree of honor. The personal representative must not benefit from being in that position beyond the payment that the law allows. The personal representative may not funnel benefits out of the estate to his or her preferred heirs or beneficiaries. Further, the personal representative should be accurate in the manner in which he keeps his records and the way in which he manages all the business of the estate. As mentioned earlier, accuracy can only be achieved where the personal representative maintains excellent records concerning his actions as the personal representative. Therefore, keep your receipts, copies of bank statements, written notes concerning the decisions you make, and records of how you reached a particular decision, especially if there is any reasonable likelihood that someone would want to know why you made a particular decision.

Here are some practical application tips for serving as a loyal personal representative who is honoring her duty of fidelity to the estate and to the heirs.

First, never mix your personal money with the estate money. This mixing of funds is called comingling and is specifically forbidden. The estate should either have its own bank account or it should use the lawyer’s trust account. The disadvantage of using the lawyers trust account is the loss of earned interest. The disadvantage of using a separate bank account for the estate is the small start up expense and the time involved with setting up and maintaining the account.

Second, it is absolutely urgent that the personal representative never prefers herself to other heirs or beneficiaries of the estate. Remember that the assets belonging to the estate are not your own assets. You are not free to give away estate assets any more than you are free to give away my assets. There may come a day when you inherit these assets from the estate, but that day has not yet come. (When it does come, you will, of course, be free to give away the estate assets that you have inherited in accordance with the court’s order.)

Third, you must also be careful not to prefer your spouse, children, grandchildren, or friends above other beneficiaries or heirs of the estate. If there is an item of value in the estate that your son would dearly love to own, he should bid on it at an open and fair auction just as everyone else does. Otherwise, you run the risk of being seen as violating your fiduciary duty to the estate. Such a violation can expose you to being liable for triple damages to the estate, as well as for court costs and attorney fees.

I could summarize the fiduciary duty, at least to a reasonable degree, by saying, treat the estate money as you would want your own money to be treated.

Fourth, maintain records that demonstrate that you are acting in a fair manner. If you sold the estate’s car for $2,100.00, be prepared to demonstrate that the car’s value was $2,100.00. If you were forced to sell the car for less than its apparent value, keep records that demonstrate why you were forced to do that. We recognize that on occasion, an estate must sell an item for something less than full retail value, but when that happens, be prepared to explain why you made that decision.

Chapter 9

Selling Assets that Belong to the Estate

Why Might it be appropriate to sell eState assets

Sometimes, even often, it is not possible for the estate to pay all of the debts incurred by the decedent without selling some of his or her assets. In other instance there may be plenty of money to pay the bills, but the heirs prefer to inherit cash rather than inherit partial interests in assets shared with other heirs. In yet other cases, the decedent may have put a provision in his or her will directing that certain assets be sold. In some cases it is just the right time to sell a particular asset because the asset is depreciating in value, there is a particularly strong demand for that asset, or it may be the best time of the year to sell a particular item.

If you do decide that property of the estate should be sold, consult your attorney. There are statutory procedures that you must follow in order to sell property belonging to the estate and there are statutes that impose financial penalties if you fail to follow the law correctly when you are selling assets of the estate.

Selling Real Property

Real property is the legal terminology for real estate. Houses, land, and even mineral rights are all considered real property. Before your attorney begins the court process that will allow you to sell the property, consider that the real estate must be sold at 90% of its appraised value. The personal representative has the first option of appraising the property so long as he or she has sufficient knowledge. If you are not fully confident in your knowledge and research of real estate values, hire a professional appraiser or real estate agent. Sometimes a real estate agent can provide a good guide to the value of the real estate for less than the price of a formal appraisal.

If you appraise a property higher than it will bring on the open market, it is likely that there will be extra expense and time necessary to have the property reappraised at a later time after it fails to sell for 90% of the misappraisal. Therefore, it is wise that you consider input from more than one source when you are establishing the appraised value for the real estate.

METHODS OF SALE OF REAL PROPERTY

Consider the methods whereby you might sell the real estate. Might you list it with a real estate agent, have it listed on the multi-list service, and published it in a real estate magazine? This is a relatively common and well-established method that is likely to be approved by the court and the other heirs. It is also a somewhat expensive method, as the real estate agent will likely charge you 6% of the gross sales price as commission.

You may also consider selling the property at an auction. Typically auctioneers charge a lesser fee than those charged by standard real estate agents who are listing the property and showing it to prospective buyers. Unfortunately, sometimes this sales method produces a smaller net to the estate. Conversely, it is usually a quick way to liquidate a property and sometimes the auction value will be high enough that it will surprise you.

No matter what you decide, advise your attorney how you wish to sell the property so your attorney may incorporate that method into the “Petition to Sell” and “Order of Sale.” Some attorneys and personal representatives give very detailed guidance to the court as to how they wish to price the property and how soon they might reduce the price if a buyer is not found. I support the inclusion of those details. It will be very difficult for heirs to later claim that you did not receive a fair value for the property after you have given those heirs and the court detailed advice as to what you intend to do and have received a court order instructing you to follow that particular method.

Selling personal Property

You will remember that real property is land, houses and even mineral and water rights. Personal property is everything except real property. This includes things such as cars, boats, furniture, and household goods. Under Oklahoma statutes the personal representative of the estate should generally seek court approval before selling the personal property.

METHODS OF SALE OF PERSONAL PROPERTY

I recommend that you research selling methods before you approach your attorney and ask her to petition to sell the estate’s property. Consider, will you sell the personal property at an auction? How about at a tag sale or garage sale? Will you be paying a fee to someone to operate the sale? If you will not hire a professional to conduct the sale, how will you determine the value of the items?

You should also consider items and issues such as whether you will allow the heirs of the decedent to come early to the sale and make purchases. What will happen if more than one of the heirs wants a particular item? You also have the opportunity to allow heirs to take items from the sale as a portion of their inheritance. Do keep in mind that the sales tax will still need to be paid on all items sold and the professionals conducting the sale may still expect to receive their contract share of that transfer.

SALES PETITION

Once you have considered these issues make a written plan for how you wish to conduct the sale. Take that plan to your attorney. The attorney will prepare a petition for you to sign and may incorporate your written plan into that petition. The petition and a notice of court hearing will be mailed to the heirs and beneficiaries, and they will have the opportunity to have their say if they wish to object to your plan of sale. This is an important protection for you. If no one comes forward and voices an objection to the method you proposed, it will be very hard for them to complain to the judge later, so long as you actually followed the plan that you had the court approve in advance.

Chapter 10

Return of Sale

A return of sale is a report to the court of the results of the sale proceedings, whether real estate or personal property. This is the opportunity for the heirs and the beneficiaries to voice any complaints concerning your sale procedures. Therefore it is important that you provide a full and accurate accounting to the court concerning the sale. You will report what you sold, the sale proceeds, and the costs incurred for the sale. Your return of sale will be mailed to the heirs and beneficiaries along with the notice of hearing. The court and the heirs will have the opportunity to inquire about your report and the heirs may file objections to the sale. You may have to testify and answer questions after being sworn in as a witness.

Returns of Sale of Real Property

When selling real estate, the return of sale must be completed and approved before the property can be deeded to the buyer.

Occasionally a return of sale of real property gets attention because additional buyers may come forward and make bids at the hearing on the return of sale. The first bidder must bid at least 10% more than the contract that you have submitted to the Court for approval. If anyone comes to court and makes a bid of at least 10% more than the offer you submitted, that opens the bidding to additional bids and those later bids do not have to be 10% more than the previous bid. For example, if you had a contract to sell the estate acreage for $100,000.00 and a new prospective buyer comes to the hearing on the return of sale, he or she must bid at least $110,000.00 to reopen the bidding. Once that bid comes in, however, the next bid may be $111,000.00 or any bid greater than the highest bid received. When all the bids have come in, the land will be sold off to the highest bidder.

Returns of Sale of Personal Property

When the return of sale relates to personal property, the title will have already passed to the buyers, but this will be a final opportunity for the heirs and the beneficiaries to voice any complaints about the manner in which the personal representative conducted the sale. Generally, there are few objections to a return of sale on personal property.

Chapter 11

Section 239 Sales

In certain circumstances Oklahoma statutes allow a faster and less expensive method for selling of real estate in probate. This method is referred to as a “ Section 239 Sale.” If all of the heirs and beneficiaries sign consents, the court may allow the personal representative to sell the property at his or her discretion and without any court supervision. There is no formal hearing required, and there is no return of sale required.

Advantages of this method

The advantages of this method are that the attorney need not invest so much of his or her time on the case, there are no formal court hearings, and the sale can be conducted much more quickly than is required where there are no consents.

DisAdvantages of this method

There are, of course, disadvantages. For example, after the property is sold, the heirs may later complain that the personal representative violated her or his fiduciary duty to the estate by not getting the highest value from the property. It is difficult to remedy this complaint as the property now belongs to someone else, and if they received a good value, they will not readily reverse the transaction. Further the heirs and beneficiaries may withdraw their consents at any time.

There are also many situations when a Section 239 sale cannot be conducted at all because one or more of the heirs or beneficiaries cannot be located, or an heir is a juvenile and cannot sign a consent that is effective.

It is also not a good practice to use the abbreviated sale procedure where there is a lack of confidence between the personal representative and the heirs. A Section 239 sale procedure requires the highest degree of fidelity and trust, and it is not suitable for every situation. Consult your attorney carefully before taking advantage of this process.

Chapter 12

Paying Taxes

Estate Taxes

Many people have heard that Oklahoma no longer assesses and collects estate taxes. That is generally correct. However, Oklahoma does require estate tax returns in certain circumstances, generally where there is a substantial amount of time between date of death and date of probate and the decedent died before the current status of Oklahoma estate taxes was passed into law.

Additionally there is still a federal tax on estates of sufficient size. As of the date of this writing, an estate may pass more than five million dollars before the federal estate taxes apply.

Income Taxes

There may also be a final income tax return due for the decedent’s final year of life. Generally speaking, the income tax return is due on April 15th of the year following the date of death. An income tax return is required if the decedent’s income during his final year was of sufficient size or there is a refund to be claimed. Please consult your tax accountant as soon as you have determined the amount of income the decedent had in his or her last year of life.

Some probate estates will have their own income tax returns to file. Perhaps the estate owns rental property or something similar. If so, that rental income will likely trigger income taxes. The estate might also sell stock and other assets that have increased in value, and that sale may cause income taxes to become due. There is also the chance that the estate is earning interest on money that is on deposit. If so, and if it is of sufficient amount, the estate will have to file an income tax return on the interest income.

Please be aware that you should discuss these issues with your tax preparer and be prepared to tell your tax preparer about the court costs and attorney fees, which the estate has accrued, as these may be a partial or complete set-off against the income.

Chapter 13

The Final Account and Petition to Distribute

The final accounting is your report to the court and the heirs and beneficiaries of all of the income and the expenses of the estate. It is also where you describe your proposed distribution to the heirs (See Exhibit 1 for a simple example of accounts and Exhibit 2 as an example of a proposed distribution).

Estate Income

Income to the estate is more than just earnings that would be considered as taxable income. The “income” is generally all of the funds and assets that have come into your control during administration of the estate. For example, you will list all of the money the decedent had in her bank account, any life insurance that was paid to the estate, the proceeds from the sale of land, the leasing of mineral interests, the receipt of royalties, rent that the estate received, and other such funds that have come into the estate.

Estate Expenses

You will also report all of the expenses of the estate. If creditors have submitted claims, and those claims have been approved, you will pay and list all of those claims. If you have paid for the care of estate property, perhaps mowing and utilities, those expenses should be listed.

Payment for burial and funeral expenses are high priority claims. Such expenses get paid even before creditors such as Visa and Master Card.

ESTATE ADMINISTRATION FEES

Court costs, publication fees, attorney fees, and other such costs of administration have a high priority of payment in Oklahoma probates, and these costs should all be listed in your final accounting. Note that the judge must approve attorney fees for the administration of the estate if those fees will be paid with money that belongs to the estate. If, however, someone is paying those fees with money that does not belong to the probate estate, there is a reasonable likelihood that the court need not consider those attorney fees.

PERSONAL REPRESENTATIVE FEES

With the help of your attorney, you will need to compute your personal representative fees. The fees of a personal representative in Oklahoma are about 2.5% of the estate for a typical administration, but these fees may be doubled if the personal representative has performed extraordinary services on behalf of the estate. Most of my clients who are inheriting from the estate choose not to claim a personal representative’s fee, as that fee is taxable to them whereas the inheritance from the estate is generally not taxable.

The Proposed Distribution

Your final accounting and petition to distribute should give a reasonably detailed proposal for the distribution of the assets belonging to the estate. Sometimes this will be very easy. For example, a surviving spouse may inherit the entire estate, and therefore the proposed distribution will suggest “100% to the surviving spouse.”

Often that is not the case, and the proposed distribution can become relatively difficult. If some heirs of the estate receive personal property as a portion of their inheritance, an accounting must be made of that personal property and adjustments applied to the inheritance of all of the heirs. If some assets will be distributed only to a portion of the heirs, and not equally to all of the heirs, that distribution and the adjustments for it should be spelled in a fairly easy to understand fashion (See Exhibit 2 for a simple example).

There will be estates for which a proposed distribution will be of sufficient complexity that you should retain an accountant to assist in the preparation of this document. Generally, however, it will be well within the capacity of the personal representative and her attorney to prepare a proposed distribution.

Estimates

It is very important that you identify any portion of your accounting and proposed distribution that is an estimate. Perhaps you might put these figures in bold and clearly identify them as estimates so as to reduce the opportunity for disappointment when the heirs receive their final checks. If an heir is expecting to receive $50,000 and has no reason to believe that that number could change, an eventually distribution of $47,000 may cause the heir to hire an attorney to begin an investigation that causes you stress and a loss of time, even if everything you have done is lawful and correct.

If you have identified the estimates as estimates and given a written disclosure that these numbers could vary, it is much less likely an heir will be disappointed over a modest deviation from your estimate.

Chapter 14

Conclusion

Oklahoma probate law requires that you keep the heirs advised of important actions of the estate and what will happen if the heirs choose not to become actively involved in the probate court proceeding. As a matter of practice, I have found that it is very helpful to have regular communication with the heirs and beneficiaries. If the heirs and beneficiaries are fully aware that you are working for their benefit and that you are keeping them on notice of all actions, there are far fewer opportunities or causes for hard feelings and therefore fewer opportunities for wasted attorney fees.

As your attorney, I want to conduct your probate in such a way as to efficiently handle your case. I want to finalize your work in my office in such a way that we will both be happy to see each other again in the future. Therefore, if you keep everyone advised of what is happening in the estate, and conduct all of your business on their behalf with the greatest of care, while keeping excellent records and you will be well on your way to making it through the probate process.

It is my hope that this book will help make all of these things easier for you and make your experience with probate, if not enjoyable, at least smooth and conflict free.

Example of an Income & Expense Account Ledger

Income

Bank of America: Acct#: 5543567

Date

From

Description

Amount

4/2/13

John Doe

Rental Payments

$650.00

7/1/13

Allstate

Insurance Refund

$749.13

8/6/13

Arvest

Interest

$2.57

8/22/13

Various

Estate Sale

$6,089.00

10/4/13

Kai Lance

Real Estate Sale

$97,500.00

Expenses

Bank of America: Acct#: 5543567

Date

From

Description

Amount

3/3/13

OG&E

Utilities

$87.50

7/9/13

Funeral Homes

Burial

$2,001.01

8/22/13

Jo Dill

Estate Sale Fee

$1,826.70

10/4/13

Keller Williams

Real Estate Agent

$5,850.00

9/2/13

Jane Po

Attorney Fees

$5,000.00

Example of a Proposed Distribution

By the terms of decedent’s will, the estate should be distributed as follows:

Specific Gifts

NameRelationshipDescription

Amy Perdue Sister the Lyon and

Healy Harp

Jason Smith Son all the guns

Caroline Foot Daughter Diamond

Wedding ring

Aaron Smith Son 1950 Mustang

Convertible

Jessica Bentley Friend Monet print

“Water Lilies”

Residuary

NameRelationshipDescription

Jason Smith Son 25% ($29,221.55)

Caroline Foot Daughter 25% ($29,221.55)

Aaron Smith Son 25% ($29,221.55)

Charlotte Smith Daughter 25% ($29,221.55)

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